2010VP06 Spice Mobiles Ltd

Spice Mobiles BSE: 517214 | NSE: SPICEMOBIL

Spice Mobiles Ltd has informed the Exchange that "The Board of Directors of the Company at its meeting held today i.e. on January 30, 2010:(a) Approved a Scheme of Amalgamation (the Scheme) for the merger of M/s. Spice Televentures Pvt. Limited (STPL) into the Company with effect from 1st January 2010 being the Appointed Date under the Scheme; and (b) Took on record the valuation carried out by M/s BSR & Co., Chartered Accountants vide their report dated January 30, 2010. As per the report ,the Company's shares have been valued at Rs. 109 per equity share and STPL's shares have been valued at Rs. 862 / equity share. The Company has also received a "Fairness Report" from Karvy Investor Services Ltd, endorsing the valuation and swap ratio recommended by the valuers as fair.The Board of Directors of STPL and the Company have accepted the swap ratio of 791 equity shares of the Company for every 100 equity shares held in STPL. As a result of this, on approval of the 'Scheme' by the shareholders and relevant authorities, 16.34 Crore equity shares will be issued to the shareholders of STPL as on the Record Date. The existing equity shares of the Company held by STPL will be extinguished. The equity capital of the company post completion of this action will be 19.09 Crore equity shares of Rs. 3 each. Aforesaid Scheme shall, inter-alia, be subject to approval of the Shareholders / Creditors of respective companies, the Hon'ble High Courts of Allahabad and Delhi, and other statutory / regulatory authorities".

B K Modi-led Spice Mobiles will merge Spice Televentures (STPL) with itself as part of efforts to consolidate the group`s telecom businesses.
The board has approved a swap ratio of 7.91 shares of Spice Mobiles for every share held in STPL. Spice Mobile is valued at Rs 109 per share while Spice Televentures valued at Rs 862 per share. Post merger, the promoter stake will go upto 85%.
In an interview with CNBC-TV, BK Modi, Chairman of Spice Mobile spoke about the company’s restructuring plans and the road ahead.

Total valuation of group around Rs 2000cr: Based above valuation Spice Mobile share is valued around Rs 105

Transcripts from Interview with BK Modi on future of Spice Mobile Ltd

A: We are building a company, which will be serving mobile internet in the market and there is a big change coming in the markets and mobile internet is taking off. We are adding products and services in all our range. So our mobile phone, which we have introduced since last three years now, we are increasing the range. We are also launching smart phones and phone with memory cards, dual sim cards.
We are increasing our range from 30 to 100 models. We are also increasing our range of distribution to go all India because in certain markets we have a 20% plus market share but in other markets we are like less than 5%. We have this geographical coverage which we have to increase and that is where the distribution will help because we have been running these three companies separately as Celebrum, Hot Spot and Spice Mobiles. Now all will be called Spice. So Celebrum will become Spice Digital, Hot Spot as Spice Hot Spot.
The new company will be called Spice Mobility and we are already this year we are talking of Rs 2,000 crore turnover and we are hoping to increase it to Rs 5,000 in the next two to two-and-a-half years. So that is the profile of the revenue side and on the profitability side, because our retail business is now turning around and our mobile business is already profitable and digital business is very profitable, we are talking of 10-15% revenue as profit is concerned.


A: The valuations which have been done by the independent valuers like KPMG, is of the combined entity at about Rs 1,900-2,000 crore. They have valued the shares of Spice Mobile to go as high as Rs 109 per share as per their valuations and this is based on the future projections and the deals which have been done in this industry. The mobile internet industry is moving very fast as you are aware that this is the biggest thing happening in the decade.

We had mobile and internet but when you combine these two technologies it becomes a very powerful platform, which changes the life of the whole society. That is why we are hoping that in the new mobile society we will play a bigger role in terms of serving the rest of us.


A: We are already selling Nokia phones through Spice Retail. We are not selling it off. In fact, we have bought two new companies recently. We are also trying for a position where we have a uniform market share for all over India. As I said both in retail and in mobile we have skewed market share in certain markets. We had in the past, market share, which is very high in certain markets and low in others. So our idea is to make it even. Ultimately, we are able to sell through our mobile and retail and nearly 20% of the mobile internet customers....